The Ultimate Standard of Value [23]
a pair of shears still holds good. One of the two blade, whose coming together determine the height of the price of any species of product, is in truth the marginal utility of this particular product. The other, which we are wont to call "cost," is the marginal utility of the products of other communicating branches of production. Or, according to Wieser, the marginal utility of "production related goods" (productionsverwandten Guter). It is, therefore, utility and not disutility which, as well on the side of supply as of demand, determine the height of the price. This, too, even where the so-called law of cost plays its role in giving value to goods. Jevons, therefore, did not exaggerate the importance of the one side, but came very near the truth when he said "value depends entirely upon utility." Almost, but not quite entirely, for as I have endeavored to show, and as Jevons well knew, disutility plays a certain part in the determination of value. A part, however, which, in our actual economical conditions, is quantitatively unimportant. It occurs in full force only, in the case of the few and unimportant products of our leisure hours. For the great mass of products which are the outcome of our regular occupation, this disutility either does not appear, or is only a very weak and remote element in the complex standard that determine the" height of the cost."(42*) If we were to put this roughly into figure, we might say that the ten parts of that blade which represents the demand consist entirely of utility, while of the blade which represents the "cost", nine parts are utility and only one part disutility. On the whole then value depends nineteen-twentieths on utility, and only one-twentieth on disutility. We must now consider a circumstance, which thus far in our argument we have intentionally ignored. Up to this point we have confined ourselves to those conceptions of the law of cost which come nearest to harmonizing with those of our opponents, namely, those which declare that there is a correspondence between the price and the historically reckoned cost, i.e., the cost elements, labor and abstinence. It was only in this way that we could eliminate all those intermediate members, raw material, wear and tear of tools, etc., which in practice appear as part of the cost, and in common with most of our opponents, speak of labor and abstinence as the determining factors of cost. We must not, however, forget that there is a second sense, in which the law of cost is susceptible of empirical demonstration, namely, the sense in which the law of cost assert a correspondence between the price and the synchronously reckoned money cost of the entrepreneur.(43*) When we carefully consider the historical and synchronous method of reckoning cost in their relations to each other, it is manifest, that while there is some connection between them, yet they are not entirely the same, either in their content or in the extent of their sway. The correspondence of the price with the historically reckoned cost involve the satisfying of much more severe and unusual conditions. The leveling feature, upon which both rules rest, must here operate unhindered through the whole of the complex system of production, down to the last elementary root. On the other hand, the gravitation of the price, toward the synchronously reckoned money cost of any particular stage of production, merely assume that the leveling influence has free sway in this part of the productive process. The gravitation toward the synchronously reckoned cost is to a certain degree more readily satisfied. For this reason it is more frequently operative, and hence there is a wide district, subject to its sway, which is not subject to the sway of the historically reckoned cost. There are numerous instances in which the synchronously reckoned cost of a single stage of production is effective in determining the price of the product, although there may be no correspondence between the price and the historically reckoned cost. This may be due to the fact that the leveling